Brazil's Path to Hardware Manufacturing at Home

SAO PAULO — Brazil's policies on imported goods are hurting the country's economy. But engineers can do something about it.

That was the message delivered by Jon "Maddog" Hall, president of Linux International, in his keynote at the opening day of the Embedded Systems Conference in Sao Paulo.

At ESC Brazil, keynoter John Hall, president of the Linux Foundation, lays out a scenario for how a clone of the Raspberry Pi, only better and much cheaper, could be made in Brazil. Call it the Plum Pi.

"There are many reasons that more companies don't design and manufacture products here in Brazil," Hall said. "They don't trust the market size, and they are concerned about the cost of a manufacturing startup." It comes down to "cost, time, and uncertainty."

Instead, companies have their designs manufactured in places like Taiwan, and that strategy has a major drawback: When the product comes to Brazil, it's hit with a 100% import tax, which is passed on to the consumer. "This is a big mistake and a bad thing for the Brazilian economy."

Hall cited the Raspberry Pi, which has sold more than 3 million units, as a case in point. "The Raspberry Pi has a $35 retail value in the US. Add on $10 for shipping and 100% import taxes, and that same board costs around $90 in Brazil. Given the lower GDP here in Brazil, that means that most consumers are paying about 4X more for the Pi, which is a crime against God and Al Gore."

He then laid out a scenario for how a clone of the Raspberry Pi, only better, could be made in Brazil. Call it the Plum Pi.

"A company could start by taking an already proven design and using open components from a popular architecture like ARM," he said. "Add on an FPGA, WiFi, USB 3.4, and you have a robust platform for students to learn to program something other than a single-core processor."

To overcome skepticism about the market opportunity in Brazil, Hall suggested incorporating new components for developers to use and test and generating 10,000 boards to sell to a test market. The kicker would be to license the board and components freely to companies that wish to manufacture it in Brazil. The Raspberry Pi Foundation does not do that currently.

Under this scenario, Hall said, if the BOM for the new board less than $28 and were sourced from the developer, the cost would be $28 + $5 shipping (amortized over 10K boads) + 6% duty for a total cost of approximately $40 for each board produced in Brazil. That's less than half the current cost of a Raspberry Pi there.

Building this kind of hardware manufacturing capability in Brazil would address the chicken-and-egg challenge that countries often face, he said. By generating more challenging jobs, young people will stay, and then industry will come, because they feel like there is a trained, knowledgeable pool of talent to help make them successful. Industry will not come if they don't see a trained, knowledgeable pool of talent to make their industry successful.

— Karen Field is the editor in chief of EE Times and content director for EE Live and the Embedded Systems Conference.

[sorry for late entry---I posted this to the wrong board, so copying over now]

I am afraid most discussions here miss the point. Fortunately, many of the new 'IoT' embedded designs are open sourced: for instance, BeagleBone, which is an improved version of RasPi, publishes its design and manufacturing data, and invites imitations. THe problem is scale: Beaglebone costs $50 because of the price breaks on PCB and component cost that result from its volume (multiples of 1e5 units). Some people tried to source small variations of BeagleBone Black, and were quoted cost several times higher.

This is the problem Brazil faces: given their market size, what is the realistic production run size? BBB folks could take a risk and spin up a 100,000 unit production run. A Brazilian version would stand a risk of either assuming conservative production run (5000 units, which still is an investment of nearly half million dollars) and pricing itself out of the market, or going for broke and spinning up a 50,000 run---an investment of several million dollars that could go bad if the market wasn't there.

I agree with all the issues mentioned in this post, and was working with a large chip maker on ways to get industrial-grade computers into the market in Brazil. Its a challenge, but there are CMs there who can build locally.

I've scanned the comments and cannot fathom the fascination with the Raspberry Pi. Its based on a vintage processor that's not even available in industrial temperature grades, and the "B" board didn't even have soldered-down storage for reliability. The old ARM core doesn't support current SW. And the form-factor is the most application-adverse layout for connector positions imaginable. Its one saving grace is HDMI video, but it lacks a normal RGB parallel bus used by low-cost LCDs.

Yes, its a good board for educational purposes, sitting on a desk in a warm dry room. Absolutely.

But if you were going to create something new, you'd have to have a hole in your head to consider using the same processor. Freescale and T.I. have much better processors with current SW support, as do many other manufacturers.

Or is this a "fashion" decision and should be posted on "EF Times" (Electronics Fashion Times) ???

Max wrote: also said that he had been talking with folks like Raspberry Pi and BeagleBone along these lines with no success...

betajet wrote: I'm not surprised about Raspberry Pi, but BeagleBone is open-source hardware and anyone should be able to clone it. I believe that to use the BeagleBone name there are some additional requirements. Here's an example of a BeagleBone Black clone:

This is my understanding as well.

Licensing for the Boadcom processor in the Raspberry Pi is strict and the Raspberry Pi design is closed so duplication would be difficult and if the duplicate is not a clone, then it is just another non-Raspberry Pi.

On the other hand, the BeagleBone Black design is fully published and open and the processors are available from Texas Instruments without restrictions.

Just look at evidence of India and China over last 30 years. India engaged in a mercantilist, protectionist policies, whereas China was much more open although of course nowhere near free market. Both countries had the advantage of a cheap but able and motivated workforce---and yet China did much better.

"Such policies DO work as evidenced by Brazil's thriving and (I gather) respected car industry."

Brazil's economy - and auto sector - is in fact currently doing poorly. Import taxes on foreign automobiles were raised a couple of years ago to a ridiculous 55%, reducing consumers' spending power and ability to buy quality imported cars. At the same time Brazil is/has been a fast growing developing economy and it is much more likely that the country's progress to this point has been *in spite of* such policies and not because of them.

"But if someone in Brazil wanted to set up an R-Pi assembly line, I think, as I said above, it could turn into a win-win situation."

Maybe. Still, trade in general is a win-win situation overall. On the other hand, import restrictions on products in whole or in part simply favor a few domestic companies or industries at the expense of the overall domestic economy (as well as any trading partners whose goods are being restricted). And setting up a domestic industry to produce products that could be imported at less cost does not make sense economically and is likely to impede overall economic progress, not promote it.

@Rich a bit more detail and discussion please. Such policies DO work as evidenced by Brazil's thriving and (I gather) respected car industry.

Where I would agree with you is that a R-Pi is not the same as a completely assembled car - more like a car part -and it is short sighted to put such a heavy tarrif on it. But if someone in Brazil wanted to set up an R-Pi assembly line, I think, as I said above, it could turn into a win-win situation.

@Prabakhar....I prefer to look at it from changing from a lose-lose situation (R-Pi hardly sell any units to Brazil; Brazil loses out somewhat as a result) to a Win-Win situation (R-Pi get royalties rather than sales, and Brazil deveops their industry and gets jobs and expertise development).

Sure, Mr R-Pi must make sure that his product is of good quality when made in Brazil, and Barzil must be scrupulous about sticking to the terms of the agreement. But, as above, VW have done it and they, and Brazil, have done very nicely thank-you.